The Federal Government yesterday signed two put and call option agreements (PCOAs) with two of the 14 large scale solar power firms that have indicated interests to build and generate up to 1125 megawatts (MW) of solar power for Nigeria’s national grid.
The government had through the Nigerian Bulk Electricity Trading Plc (NBET), signed power purchase agreements (PPAs) with the 14 solar independent power plants (IPPs) in July 2016.
It was however supposed to sign the PCOAs with the firms a month after the initialing of the PPAs but could not because of long periods of negotiations on the Partial Risk Guarantees (PRG) for the projects with the World Bank and African Development Bank (AfDB).
The PCOAs serve as indemnity for the project promoters to go ahead with their constructions and ultimately bring their power to the grid.
Also, the 14 solar projects are reportedly worth $2.5 billion, and domiciled more in the northern parts of the country where solar radiation is mostly high.
However, at a ceremony in Abuja, the NBET signed the first two PCOAs with Afrinergia which would be constructing a 50MW solar farm in Nasarawa State and CT Cosmos which has a 70MW solar power project in Plateau State.
The ceremony was superintended by the Minister of Power, Works and Housing, Mr. Babatunde Fashola, who reiterated the government’s commitment to diversify the country’s energy source, as well as create an enabling environment for investors to grow the sector.
Fashola said the PCOA signing was in furtherance of the plan to generate at least 30 per cent of Nigeria’s electricity from renewable energy sources.
He said government would go on to support others to conclude their PCOAs and deploy to site.
Also speaking, the Managing Director of Afrinergia, Mr. Bestman Uwadia, stated that the signing of the PCOA would now give his company the confidence to conclude and commission the solar plant located in Onyi, Kokona Local Government Area of Nasarawa.
Uwadia noted that the company could transmit the first ever solar power into Nigeria’s national grid in the next six months.
“In a lay man’s term, the power sector has been privatised over the years and the government is not really acting in the production of power, but they have said they will guarantee the payment on behalf of Nigerians and what you have seen today is that they are guaranteeing that if we generate power, they will pay in case Nigerians don’t pay for power. So, the government is standing in the gap and saying, they will pay but go and produce power,” said Uwadia.
He further stated: “Our project was nominated to the AfDB PRG, we are with the AfDB. We have been on site in the last two and parts of the reasons why we do not have power today is because the documentation processes were not concluded. The PPA was signed last year, the PCOA was supposed to be signed a month after the PPA was signed, and now it has taken over eight months because some of the delays are from documentations.
“In terms of our calendar in power generation, as a company, we are still within our projections and soon in the next six months hopefully, you will begin to see power in the grid.”